Trade: Innovation and Technology Leadership

WM Trade: Maintaining American Innovation and Technology Leadership, January 13, 2026

Innovation and technology leadership are buzz words, not the core problems with our trade policies. They only apply to the extent that current issues with the taxation of intellectual property and immigration policies. The question of intellectual property can be quickly overcome by either tying corporate tax filing to the actual geographic location of the corporate headquarters or the repeal of corporate income taxes, replacing them with consumption taxes - which are addressed below.

Tariff implementation is a very real threat to our competitiveness unless tariffs are zero rated for products which are to be re-exported as part of global supply chain management. This is an easy fix that can be accomplished by domestic law - or possibly by international convention or ad hoc implementation.

The other problem is human capital based, which is entirely the result of the Administration’s policies on the funding of higher education and the ability of foreign students to come here freely - especially when combined with the possibility that education is actually a step toward permanent immigration (with a nod and a wink). 

American graduate education, especially at the doctoral level, relies heavily on foreign student participation - most often paying full-time tuition which provides a valuable subsidy for funding American students. Next fall’s income class will be decimated - although in the long-term, this may have the effect of ending the over-supplying the pool of doctoral degree holders who cannot find tenure-track positions. Most graduates end up doing research. 

Administration policy, largely because it does not account for the fact that most DEI initiatives favor veterans (especially regarding federal employment), has damaged the ability of academic institutions to perform basic - and sometimes advanced - research that directly affects American innovation and competitiveness.

Foreign graduates should receive automatic approval for H-1B visas without being tied to a particular employer or paying a fee or the fiction that such employment is temporary. Not requiring these students to repatriate at graduation prevents the intellectual property they would generate from automatically becoming an asset for their home countries. Current policies have also damaged American competitiveness to the extent that they keep all high-skill workers from relocating the United States.

Administration actions, which are part of their nationalistic “America First” movement, are a feature, not a flaw of Mr. Trump’s economic and social policies. Many of his supporters, who have been damaged by the former bipartisan neo-liberal consensus, specifically voted to end any form of internationalism. Capitalism very rarely provides adequate retraining - while meeting the opportunity costs of those who have lost their jobs to trade. Government actions to counter the related externalities - including the lack of opportunity inherited by the next generations - have multiplied the market failure inherent with globalization. Many Trump voters knew exactly what they were getting when they voted against the status, even though what actually resulted made them worse off on a short and long term basis. This is especially true with trade policy.

Sadly, our trade problems are self-inflicted - not only because the President is shooting from the hip, but because he is doing so with an empty gun. The President’s unilateral actions are before the courts and are likely to be revoked. This may or may not bring us back to the status quo before January 20th of last year, however when the Supreme Court finally hears the case, the question of tariff rates will likely go before Congress - where it should be. 

There are two approaches to dealing with this issue. One is to replace tariffs entirely and enact a national goods and services tax. The rationale for doing so, with further explanation on the elements of our proposals can be found in the first and second attachments. 

Part of comprehensive tax reform is the conversion of capital gains taxes to an asset value added tax of between 23.8% and 37% - with no distinction between short and long term holding. This rate should be internationally negotiated so as to avoid stock market tax arbitrage - which would  become a race to the bottom. Although some of this could be avoided by technology (with the “exchange” in the Cayman Islands, Luxembourg or Ireland) - this would increase the possibility that hacking could upset the entire system. At worst, the price of real estate in Manhattan and Long Island would crash if traders were forced to actually move to where the exchange is. 

The other option for trade reform is for Congress to enact specific tariffs based on the value added taxes of our trading partners - plus certain other applicable factors regarding our long term trade policy. Both options are under the jurisdiction of the Ways and Means Committee, with the latter under this subcommittee.

The President and the  Office of the Special Representative for Trade Negotiations should retain the authority to make trade deals using permanent law - rather than unconstitutional authority - based on either value added tax or congressionally enacted tariffs as a baseline, however to do so the Office needs to be restaffed. The President has the Office out by firing long term personnel. If possible, these individuals should be rehired. If not, then both Majority and Minority staffs should recommend personnel to the Administration to replace them. This may not be hard to do come November, given the likely results of the midterm elections.

Attachment: Trade Policy Video

Attachment: Tax Reform Videos included

Attachment: Tariff Rates